Oil Prices Tumble Below $30 a Barrel
U.S. crude posts lowest settlement since 2003
Oil prices settled below $30 a barrel on Friday for the first time in 12 years as turmoil in Chinese markets and the expected increase in Iranian crude exports added to concerns that a global glut will linger.
Light, sweet crude for February delivery settled down $1.78, or 5.7%, at $29.42 a barrel on the New York Mercantile Exchange, the lowest settlement since November 2003.
Brent, the global benchmark, fell $1.94, or 6.3%, to $28.94 a barrel on ICE Futures Europe, marking the lowest settlement level since February 2004.
After more than a year of collapse, this week saw some of oil prices’ biggest losses since the financial crisis. A glut of oil hasn’t caused producers to slow down and traders are worried that demand won’t grow enough to soak it up. That has pushed oil into a bear market, with both U.S. and global prices down more than 20% since the start of the year.
Dour economic signs have inflamed fears about demand in China, the world’s second-biggest oil consumer. Also, Iranian oil is expected to hit the market soon after long-standing international sanctions are lifted.
“This is a culmination of all those things,” said Michael Tran, commodity strategist at RBC Capital Markets. “It’s all causing a panic in the market where sentiment was already poor to begin with.”
U.S. oil declined 11% this week, marking its 12th losing week of the last 14 and its worst one-week percentage losses in more than a year.
Brent’s weekly percentage losses were the worst since December 2008 and marked its sixth losing week in the past seven.
“With the global economy, we could be in a serious crisis…which translates into a lack of demand for energy,” said Gene McGillian, an analyst at Tradition Energy.
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